The Economic Activity of Djibouti

Djibouti makes use of its strategic location in the Horn of Africa to maintain economic stability. It is a free trade zone located strategically between the waters of Mediterranean Sea and Indian Ocean. The country acts as a transit port as well as international transhipment center as almost 60% of the commercial ships in the whole world pass its waters and make use of its port.

The climate in Djibouti is not conducive to growing crops so basically, almost all food resources are imported from other countries like Saudi Arabia, India, China, USA, Malaysia and Japan. Other imported products include beverages, petroleum products and transportation equipment. The country only exports animal hides and skins as well as coffee to countries like Somalia, France and United Arab Emirates as their home grown crops like fruits and vegetables are just sufficient for their area. Djiboutian people also herd animals like goats, camels and sheep to sell their hides to the international market.

Though it may seem that the country is economically stable because of its strategic location, it is still dependent on foreign aids to help the government balance its debts and finance development projects which the country need at present. While inflation rate in the country is not a problem as the Djiboutian franc is tied up with the US dollar, the percentage of people below poverty line is still high (42%). Moreover, the unemployment rate in the urban areas is 60% which is quite problematic. This is due to the fact that over half of the population are in the urban areas while a small percentage stays as nomadic herders.

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